OECD indicated the intention to commerce two new projects to revise the guidance in Chapter IV (administrative approaches) and Chapter VII (intra-group services) of the Transfer Pricing Guidelines. Interested parties are invited to send their comments no later than June 20, 2018.
The revision aims at minimising transfer pricing disputes and helping to resolve them, increasing tax certainty for taxpayers and preventing double taxation. Future work could be done to update the guidance in Chapter IV in relation to examination practices and to mechanisms to prevent and resolve tax disputes, and to potentially include guidance or risk assessment. Public comments are welcomed especially on the following issues:
In 2015, as part of the Base Erosion and Profit Shifting (“BEPS”) Project, Chapter VII was updated to incorporate a simplified approach to determine the arm’s length charges for low value-adding intra-group services (“LVAIGS”). Apart from this, the chapter has not been reviewed to incorporate the guidance developed under BEPS Actions 8-10. Accordingly, the future revision of Chapter VII could be focused on aligning the guidance with Chapter I, in particular, but also Chapters VI and VIII, as well as considering whether and, if so how, to incorporate the ongoing work on the use of profit split methods and financial transactions. The concern related to the guidance in Chapter VII is its practical application, rather than potential theoretical disagreements on the underlying principles. Views of interested parties are welcomed in practical challenges in particular:
Comments in excess of ten pages should attach an executive summary limited to two pages, which should be all in word format.
With the fast growth of China’s economy and the continuous improvement of the comprehensive strength of domestic enterprises, as well as the implementation of the “One Belt, One Road” policy, an increasing amount of Chinese enterprises are beginning to expand their global footprint and establish their presence in Europe.
TPA Global has developed a practical roadmap of 6 steps meant to guide CFOs in their Journey of rising above troubles to reach a situation of full control. These steps are presented in a series of short video clips (3-5 minutes):